What is superannuation?
Personal superannuation (often simply known as ‘super’) is money that’s put aside and saved while you’re working, so you can enjoy a regular income later in life when you retire. These days, the average Australian may expect around 20 years of retirement. By investing money in a superannuation fund, you’re building a nest egg to live on when you’re no longer earning a wage. And the more you put away now, the more you’ll be able to spend in your retirement.
How does it work?
If you work for a company or organisation, your employer must pay money into a super account in your name, which is then managed by a super fund. The formula used is currently 9.5% of your income, including bonuses, commissions and loadings. This is called the Super Guarantee and it's the law.
You can also add extra money to your super account, so you’ll have even more to live off when you retire.
If you’re self employed you choose how much of your income you set aside for superannuation.
Over the course of your working life, the contributions add up and are invested by your super fund with the aim of growing them even further.
To help ensure your superannuation savings are there for you in retirement, the government places restrictions on when and how you can access your super.
When can I access my super?
Generally you need to wait until you retire. Thinking of early retirement? See when you can access your super $ here -
Remember you need to be at least 60 for your super to be tax free.
Once you’ve retired you can then:
- Have a regular super income stream to make your retirement more comfortable
- Take out a lump sum (but take care not to spend your future!)
- Combine a regular income stream with the Government Pension
How do I apply for super?
While most employers have a default fund, you can generally ask your employer to pay your super into a fund of your choice. You’ll find more details about selecting the right fund for you on the Choose A Fund page.